The latest on California politics and government

December 3, 2010

California's high-speed rail project has been sharply criticized in recent months by the Legislature, by the Legislature's budget analyst, and by the University of California's Institute of Transportation Studies.

This week, as the High-Speed Rail Authority was approving the first segment for construction near Fresno - and receiving more criticism from advocates of other regions - it was also being hammered by a "peer review group" of transportation experts.

The ad hoc group of experts, organized by the Legislature and headed by Will Kempton, the former state director of transportation, said in a report that the project needs "a thorough reassessment of a number of critical engineering, financial, economic and managerial issues."

It describes a chicken-or-the-egg series of critical issues that must be resolved, including a lack of adequate staff, a business model that clarifies who will be responsible for what phase of the project, the changing political climate for the massive federal aid the project would require and strategies for attracting outside investment under the restrictions imposed by the ballot measure that authorized the project.

"There is now considerable uncertainty and unreliability of federal funding combined with the state's structural deficit, overreliance on federal funding and budget unpredictability," the report says.

"The lack of a clear financial plan is a critical concern," the panel continued, citing an "air of unreality" about expectations that the federal government will contribute $17 billion to $19 billion. The new Republican majority in the House appears poised to block further high-speed rail funding as exacerbating an already huge federal deficit.

Voters approved a $9.95 billion state bond issue but project cost estimates have soared beyond $40 billion and its viability depends not only on questionable federal participation, but local government expenditures for support projects even though they are "highly stressed," and private investment, the report said.

The lack of dependable federal, state and local financing "limits the project's credibility with private investors," the peer panel said.

The report went on to cite questions about ridership projections, and the apparent need for "revenue or demand guarantees" to private investors that might violate the bond measure's ban on any "operating subsidy."

The peer panel's report gives new ammunition to the project's critics inside the Legislature, especially Senate Transportation Committee chairman Alan Lowenthal, in the media and in local groups such as a coalition of cities on the San Francisco Peninsula opposed to running the San Francisco-Los Angeles route through their neighborhoods.